Valero Energy Corporation (NYSE:VLO) (“Valero”) today reported net
income attributable to Valero stockholders of $814 million, or
$1.73 per share, and adjusted net income attributable to Valero
stockholders of $503 million, or $1.07 per share, for the
second quarter of 2016 compared to net income attributable to
Valero stockholders of $1.4 billion, or $2.66 per share, for
the second quarter of 2015. Adjusted net income attributable
to Valero stockholders for the second quarter of 2016 excludes an
after-tax benefit of $311 million, or $0.66 per share, which
is composed of (i) a $454 million benefit related to the change in
the lower of cost or market inventory valuation reserve less
related tax expense of $87 million, and (ii) an asset impairment
loss of $56 million associated with our long-lived assets in Aruba.
The benefit relating to the change in Valero’s lower of cost
or market inventory valuation reserve resulted from an increase in
hydrocarbon inventory values during the quarter.
Reconciliations of actual to adjusted amounts are shown in
the accompanying financial tables.
“Despite a challenging earnings environment, our
operations generated $2.3 billion of cash during the quarter,” said
Joe Gorder, Valero Chairman, President and Chief Executive
Officer. “Our advantaged refining portfolio in the U.S. Gulf
Coast and our team’s focus on safe, reliable, low-cost operations
allowed us to continue delivering solid performance despite lower
margins.”
Valero exported a second quarter record 396,000
BPD of diesel and gasoline combined in the second quarter of
2016.
“Demand for refined products domestically and in
the export markets remained strong in the second quarter,” said
Gorder. “We are also encouraged by ample supplies of medium
and heavy sour crude oils in the market, which should help to
expand their discounts relative to Brent crude oil, and by a
positive demand outlook.”
RefiningThe refining segment
reported $1.3 billion of operating income ($954 million of adjusted
operating income) for the second quarter of 2016, compared to $2.2
billion of operating income for the second quarter of 2015.
The decline was primarily attributable to weaker gasoline and
distillate margins. Other factors included narrower sweet
crude oil discounts relative to the Brent benchmark and higher
costs to meet our biofuel blending obligations (primarily for the
purchase of RINs).
Biofuel blending costs were $173 million in the
second quarter of 2016, which was $117 million higher than the
second quarter of 2015. Valero continues to expect such costs to be
between $750 million and $850 million for 2016.
Valero’s refineries achieved 94 percent
throughput capacity utilization and averaged 2.8 million BPD of
throughput volume in the second quarter of 2016, in line with the
second quarter of 2015.
EthanolThe ethanol segment
reported $69 million of operating income ($49 million of adjusted
operating income) for the second quarter of 2016 compared to
$108 million of operating income for the second quarter of
2015. Ethanol production volumes averaged 3.8 million
gallons per day in the second quarter of 2016, which was consistent
with the second quarter of 2015. Valero expects ethanol
demand to remain strong given high gasoline demand in the U.S. and
attractive economics for corn-based ethanol exports.
Corporate and OtherGeneral and
administrative expenses were $159 million in the second
quarter of 2016 compared to $178 million in the second quarter
of 2015. The effective tax rate of 26 percent in the
second quarter of 2016 was lower than the second quarter of 2015
and lower than the expected rate for the second quarter of
2016. The lower rate was due primarily to the positive change
in the lower of cost or market inventory valuation reserve in the
second quarter of 2016.
Investing and Financing
ActivitiesCapital investments totaled $461 million in
the second quarter of 2016, of which $164 million was for
turnarounds and catalyst. This amount excludes our purchase
of the remaining 50 percent membership interest in Parkway Pipeline
LLC (“Parkway Pipeline”) from a wholly owned subsidiary of Kinder
Morgan Inc. (“KMI”), which occurred on June 30, 2016.
Valero paid $282 million in dividends and
purchased over 7.5 million shares of its common stock for
$401 million, resulting in total cash returned to stockholders
of $683 million in the second quarter of 2016.
Liquidity and Financial
PositionValero ended the second quarter of 2016 with
$7.5 billion of total debt and $4.9 billion of cash and
temporary cash investments, of which $67 million was held by
Valero Energy Partners LP (NYSE:VLP). The debt to capital
ratio, net of $2 billion in cash, was 21 percent.
“Our balance sheet strength and commitment to
disciplined capital allocation positioned us well in this low
margin environment,” said Gorder.
Strategic UpdateConstruction
and startup of the $400 million, 90,000 BPD crude unit at
Houston was completed in June. The crude unit is running well
at full capacity.
“The safe and reliable startup of the new
Houston crude unit is the latest example of the rigor and
efficiency our team applies to project execution,” said Gorder.
Valero continues to expect 2016 capital
investments, including turnarounds, catalyst, and joint venture
investments, to be approximately $2.6 billion. About
$1.6 billion is required to sustain the business, which
includes spending on turnarounds, catalyst, and asset replacements
and improvements. The balance is for investments intended to
drive long-term earnings growth and is split between refining asset
optimization and logistics projects. Valero expects most of
the logistics growth capital to be eligible for future drop down to
VLP.
As previously noted, Valero acquired the
remaining 50 percent membership interest in Parkway Pipeline from a
subsidiary of KMI, bringing Valero’s interest in the pipeline to
100 percent. This refined petroleum products pipeline
connects Valero’s St. Charles refinery to the Plantation pipeline
system, with a planned connection to the Colonial pipeline system.
This acquisition is consistent with Valero’s strategy of optimizing
its refining system through investments in logistics assets.
Conference CallValero’s senior
management will hold a conference call at 11 a.m. ET today to
discuss this earnings release and to provide an update on company
operations and strategy.
About ValeroValero Energy
Corporation, through its subsidiaries, is an international
manufacturer and marketer of transportation fuels, other
petrochemical products and power. Valero subsidiaries employ
approximately 10,000 people, and its assets include
15 petroleum refineries with a combined throughput capacity of
approximately 3 million barrels per day, 11 ethanol
plants with a combined production capacity of 1.4 billion
gallons per year, a 50-megawatt wind farm, and renewable diesel
production from a joint venture. Through subsidiaries, Valero owns
the general partner of Valero Energy Partners LP (NYSE:VLP), a
midstream master limited partnership. Approximately
7,500 outlets carry the Valero, Diamond Shamrock, Shamrock,
and Beacon brands in the United States and the Caribbean; Ultramar
in Canada; and Texaco in the United Kingdom and Ireland.
Valero is a Fortune 500 company based in San Antonio. Please visit
www.valero.com for more information.
Valero ContactsInvestors:John
Locke, Vice President – Investor Relations, 210-345-3077Karen Ngo,
Manager – Investor Relations, 210-345-4574
Media:Lillian Riojas, Director – Media Relations
and Communications, 210-345-5002
To download our investor relations mobile app,
which offers access to SEC filings, press releases, quotes, and
upcoming events, please visit Apple’s iTunes App Store for your
iPhone and iPad or Google’s Play Store for your Android mobile
device.
Safe-Harbor StatementStatements
contained in this release that state the company’s or management’s
expectations or predictions of the future are forward-looking
statements intended to be covered by the safe harbor provisions of
the Securities Act of 1933 and the Securities Exchange Act of
1934. The words “believe,” “expect,” “should,” “estimates,”
“intend,” and other similar expressions identify forward-looking
statements. It is important to note that actual results could
differ materially from those projected in such forward-looking
statements. For more information concerning factors that
could cause actual results to differ from those expressed or
forecasted, see Valero’s annual reports on Form 10-K and quarterly
reports on Form 10-Q filed with the SEC and on Valero’s website at
www.valero.com, and VLP’s annual reports on Form 10-K and quarterly
reports on Form 10-Q filed with the SEC and on VLP’s website at
www.valeroenergypartners.com.
Use of Non-GAAP Financial
InformationThis earnings release and the accompanying
financial tables include references to financial measures that are
not defined under U.S. generally accepted accounting principles
(“GAAP”). These non-GAAP measures include adjusted net income
attributable to Valero stockholders, adjusted earnings per common
share – assuming dilution, adjusted operating income, and gross
margin. We have included these non-GAAP financial measures to
help facilitate the comparison of operating results between
periods. See the accompanying financial tables in this
earnings release for a reconciliation of these non-GAAP measures to
the most directly comparable U.S. GAAP measures. In note (c) to the
tables that accompany this release, we disclose the reasons why we
believe our use of the non-GAAP financial measures provides useful
information.
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEFINANCIAL
HIGHLIGHTS(Millions of Dollars, Except Share and
per Share Amounts)(Unaudited) |
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Statement of income data: |
|
|
|
|
|
|
|
|
|
Operating revenues |
|
$ |
19,584 |
|
|
$ |
25,118 |
|
|
$ |
35,298 |
|
|
$ |
46,448 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales (excluding the lower of cost or market inventory
valuation adjustment) |
|
17,120 |
|
|
21,394 |
|
|
30,627 |
|
|
39,557 |
|
Lower of cost or market inventory valuation adjustment (a) |
|
(454 |
) |
|
— |
|
|
(747 |
) |
|
— |
|
Operating expenses |
|
|
1,001 |
|
|
1,043 |
|
|
2,031 |
|
|
2,127 |
|
General and administrative expenses |
|
|
159 |
|
|
178 |
|
|
315 |
|
|
325 |
|
Depreciation and amortization expense |
|
|
471 |
|
|
425 |
|
|
956 |
|
|
866 |
|
Asset impairment loss (b) |
|
|
56 |
|
|
— |
|
|
56 |
|
|
— |
|
Total costs and expenses |
|
|
18,353 |
|
|
23,040 |
|
|
33,238 |
|
|
42,875 |
|
Operating income |
|
|
1,231 |
|
|
2,078 |
|
|
2,060 |
|
|
3,573 |
|
Other income, net |
|
|
14 |
|
|
8 |
|
|
23 |
|
|
32 |
|
Interest and debt expense, net of capitalized interest |
|
(111 |
) |
|
(113 |
) |
|
(219 |
) |
|
(214 |
) |
Income before income tax expense |
|
|
1,134 |
|
|
1,973 |
|
|
1,864 |
|
|
3,391 |
|
Income tax expense |
|
|
291 |
|
|
608 |
|
|
508 |
|
|
1,058 |
|
Net income |
|
|
843 |
|
|
1,365 |
|
|
1,356 |
|
|
2,333 |
|
Less: Net income attributable to noncontrolling interests |
|
29 |
|
|
14 |
|
|
47 |
|
|
18 |
|
Net income attributable to Valero Energy Corporation
stockholders |
|
$ |
814 |
|
|
$ |
1,351 |
|
|
$ |
1,309 |
|
|
$ |
2,315 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share |
|
|
$ |
1.74 |
|
|
$ |
2.67 |
|
|
$ |
2.79 |
|
|
$ |
4.53 |
|
Weighted-average common shares outstanding (in millions) |
|
467 |
|
|
505 |
|
|
468 |
|
|
509 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share – assuming
dilution |
|
|
$ |
1.73 |
|
|
$ |
2.66 |
|
|
$ |
2.78 |
|
|
$ |
4.52 |
|
Weighted-average common shares outstanding –
assuming dilution (in millions) |
|
470 |
|
|
508 |
|
|
471 |
|
|
512 |
|
|
|
|
|
|
|
|
|
|
|
Dividends per common share |
|
|
$ |
0.60 |
|
|
$ |
0.40 |
|
|
$ |
1.20 |
|
|
$ |
0.80 |
|
|
|
See Notes to Earnings Release. |
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEFINANCIAL HIGHLIGHTS BY
SEGMENT(Millions of
Dollars)(Unaudited) |
|
|
Three
Months Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Operating
income: |
Refining |
|
$ |
1,332 |
|
|
$ |
2,161 |
|
|
$ |
2,290 |
|
|
$ |
3,802 |
|
Ethanol |
|
69 |
|
|
108 |
|
|
108 |
|
|
120 |
|
Corporate |
|
(170 |
) |
|
(191 |
) |
|
(338 |
) |
|
(349 |
) |
Total |
|
$ |
1,231 |
|
|
$ |
2,078 |
|
|
$ |
2,060 |
|
|
$ |
3,573 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Refining |
|
$ |
902 |
|
|
$ |
935 |
|
|
$ |
1,833 |
|
|
$ |
1,899 |
|
Ethanol |
|
99 |
|
|
108 |
|
|
198 |
|
|
228 |
|
Total |
|
$ |
1,001 |
|
|
$ |
1,043 |
|
|
$ |
2,031 |
|
|
$ |
2,127 |
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization expense: |
|
|
|
|
|
|
|
|
Refining |
|
$ |
441 |
|
|
$ |
408 |
|
|
$ |
902 |
|
|
$ |
825 |
|
Ethanol |
|
19 |
|
|
4 |
|
|
31 |
|
|
17 |
|
Corporate |
|
11 |
|
|
13 |
|
|
23 |
|
|
24 |
|
Total |
|
$ |
471 |
|
|
$ |
425 |
|
|
$ |
956 |
|
|
$ |
866 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASERECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTSREPORTED UNDER U.S. GAAP
(c)(Millions of Dollars, Except per Share
Amounts)(Unaudited) |
|
|
|
Three
Months Ended |
|
Six Months
Ended |
|
June 30, |
|
June 30, |
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Reconciliation of net income attributable to Valero
Energy Corporation stockholders to adjusted
net income attributable to Valero Energy
Corporation stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Valero Energy Corporation stockholders |
$ |
814 |
|
|
$ |
1,351 |
|
|
$ |
1,309 |
|
|
$ |
2,315 |
|
Exclude
adjustments: |
|
|
|
|
|
|
|
Lower of cost or market inventory valuation adjustment (a) |
454 |
|
|
— |
|
|
747 |
|
|
— |
|
Income tax expense related to lower of cost or market inventory
valuation adjustment |
(87 |
) |
|
|
|
(168 |
) |
|
— |
|
Lower of cost or market inventory valuation
adjustment, net of taxes |
367 |
|
|
— |
|
|
579 |
|
|
— |
|
Asset impairment loss (b) |
(56 |
) |
|
|
|
(56 |
) |
|
— |
|
Total adjustments |
311 |
|
|
— |
|
|
523 |
|
|
— |
|
Adjusted
net income attributable to Valero Energy
Corporation stockholders |
$ |
503 |
|
|
$ |
1,351 |
|
|
$ |
786 |
|
|
$ |
2,315 |
|
|
|
|
|
|
|
|
|
Reconciliation of earnings per common share –
assuming dilution to adjusted earnings per
common share –
assuming dilution: |
|
|
|
|
|
|
|
Earnings
per common share – assuming dilution |
$ |
1.73 |
|
|
$ |
2.66 |
|
|
$ |
2.78 |
|
|
$ |
4.52 |
|
Exclude
adjustments: |
|
|
|
|
|
|
|
|
Lower of cost or market inventory valuation
adjustment, net of taxes (a) |
0.78 |
|
|
— |
|
|
1.23 |
|
|
— |
|
Asset impairment loss (b) |
(0.12 |
) |
|
— |
|
|
(0.12 |
) |
|
— |
|
Total adjustments |
0.66 |
|
|
— |
|
|
1.11 |
|
|
— |
|
Adjusted
earnings per common share – assuming dilution |
$ |
1.07 |
|
|
$ |
2.66 |
|
|
$ |
1.67 |
|
|
$ |
4.52 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASERECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP
(c)(Millions of
Dollars)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Reconciliation
of operating income to gross marginand
reconciliation of operating income to
adjustedoperating income by segment: |
|
|
|
|
|
|
|
|
Refining
segment: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
1,332 |
|
|
$ |
2,161 |
|
|
$ |
2,290 |
|
|
$ |
3,802 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(434 |
) |
|
— |
|
|
(697 |
) |
|
— |
|
Operating
expenses |
|
902 |
|
|
935 |
|
|
1,833 |
|
|
1,899 |
|
Depreciation and amortization expense |
|
441 |
|
|
408 |
|
|
902 |
|
|
825 |
|
Asset
impairment loss (b) |
|
56 |
|
|
— |
|
|
56 |
|
|
— |
|
Gross
margin |
|
$ |
2,297 |
|
|
$ |
3,504 |
|
|
$ |
4,384 |
|
|
$ |
6,526 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
1,332 |
|
|
$ |
2,161 |
|
|
$ |
2,290 |
|
|
$ |
3,802 |
|
Exclude: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
434 |
|
|
— |
|
|
697 |
|
|
— |
|
Asset
impairment loss (b) |
|
(56 |
) |
|
— |
|
|
(56 |
) |
|
— |
|
Adjusted
operating income |
|
$ |
954 |
|
|
$ |
2,161 |
|
|
$ |
1,649 |
|
|
$ |
3,802 |
|
|
|
|
|
|
|
|
|
|
Ethanol
segment: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
69 |
|
|
$ |
108 |
|
|
$ |
108 |
|
|
$ |
120 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(20 |
) |
|
— |
|
|
(50 |
) |
|
— |
|
Operating
expenses |
|
99 |
|
|
108 |
|
|
198 |
|
|
228 |
|
Depreciation and amortization expense |
|
19 |
|
|
4 |
|
|
31 |
|
|
17 |
|
Gross
margin |
|
$ |
167 |
|
|
$ |
220 |
|
|
$ |
287 |
|
|
$ |
365 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
69 |
|
|
$ |
108 |
|
|
$ |
108 |
|
|
$ |
120 |
|
Exclude:
Lower of cost or market inventory valuation adjustment
(a) |
|
20 |
|
|
— |
|
|
50 |
|
|
— |
|
Adjusted
operating income |
|
$ |
49 |
|
|
$ |
108 |
|
|
$ |
58 |
|
|
$ |
120 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASERECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP
(c)(Millions of
Dollars)(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Reconciliation
of operating income to gross margin and
reconciliation of operating income to
adjusted operating income by refining segment
region (d): |
U.S. Gulf Coast
region: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
483 |
|
|
$ |
1,086 |
|
|
$ |
939 |
|
|
$ |
1,958 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(18 |
) |
|
— |
|
|
(37 |
) |
|
— |
|
Operating
expenses |
|
523 |
|
|
526 |
|
|
1,059 |
|
|
1,053 |
|
Depreciation and amortization expense |
|
265 |
|
|
238 |
|
|
530 |
|
|
485 |
|
Asset
impairment loss (b) |
|
56 |
|
|
— |
|
|
56 |
|
|
— |
|
Gross
margin |
|
$ |
1,309 |
|
|
$ |
1,850 |
|
|
$ |
2,547 |
|
|
$ |
3,496 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
483 |
|
|
$ |
1,086 |
|
|
$ |
939 |
|
|
$ |
1,958 |
|
Exclude: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
18 |
|
|
— |
|
|
37 |
|
|
— |
|
Asset
impairment loss (b) |
|
(56 |
) |
|
— |
|
|
(56 |
) |
|
— |
|
Adjusted
operating income |
|
$ |
521 |
|
|
$ |
1,086 |
|
|
$ |
958 |
|
|
$ |
1,958 |
|
|
|
|
|
|
|
|
|
|
U.S.
Mid-Continent region: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
142 |
|
|
$ |
398 |
|
|
$ |
220 |
|
|
$ |
715 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(4 |
) |
|
— |
|
|
(9 |
) |
|
— |
|
Operating
expenses |
|
143 |
|
|
142 |
|
|
285 |
|
|
296 |
|
Depreciation and amortization expense |
|
66 |
|
|
66 |
|
|
138 |
|
|
132 |
|
Gross
margin |
|
$ |
347 |
|
|
$ |
606 |
|
|
$ |
634 |
|
|
$ |
1,143 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
142 |
|
|
$ |
398 |
|
|
$ |
220 |
|
|
$ |
715 |
|
Exclude:
Lower of cost or market inventory valuation adjustment
(a) |
|
4 |
|
|
— |
|
|
9 |
|
|
— |
|
Adjusted
operating income |
|
$ |
138 |
|
|
$ |
398 |
|
|
$ |
211 |
|
|
$ |
715 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASERECONCILIATION OF NON-GAAP MEASURES TO MOST
COMPARABLE AMOUNTS REPORTED UNDER U.S. GAAP
(c)(Millions of
Dollars)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Reconciliation
of operating income to gross margin and
reconciliation of operating income to
adjusted operating income by refining segment
region (d) (continued): |
|
|
|
|
|
|
|
|
North Atlantic region: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
566 |
|
|
$ |
382 |
|
|
$ |
969 |
|
|
$ |
752 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(410 |
) |
|
— |
|
|
(646 |
) |
|
— |
|
Operating
expenses |
|
119 |
|
|
126 |
|
|
244 |
|
|
259 |
|
Depreciation and amortization expense |
|
52 |
|
|
52 |
|
|
102 |
|
|
104 |
|
Gross
margin |
|
$ |
327 |
|
|
$ |
560 |
|
|
$ |
669 |
|
|
$ |
1,115 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
566 |
|
|
$ |
382 |
|
|
$ |
969 |
|
|
$ |
752 |
|
Exclude:
Lower of cost or market inventory valuation adjustment
(a) |
|
410 |
|
|
— |
|
|
646 |
|
|
— |
|
Adjusted
operating income |
|
$ |
156 |
|
|
$ |
382 |
|
|
$ |
323 |
|
|
$ |
752 |
|
|
|
|
|
|
|
|
|
|
U.S. West Coast
region: |
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
141 |
|
|
$ |
295 |
|
|
$ |
162 |
|
|
$ |
377 |
|
Add
back: |
|
|
|
|
|
|
|
|
Lower of
cost or market inventory valuation adjustment (a) |
|
(2 |
) |
|
— |
|
|
(5 |
) |
|
— |
|
Operating
expenses |
|
117 |
|
|
141 |
|
|
245 |
|
|
291 |
|
Depreciation and amortization expense |
|
58 |
|
|
52 |
|
|
132 |
|
|
104 |
|
Gross
margin |
|
$ |
314 |
|
|
$ |
488 |
|
|
$ |
534 |
|
|
$ |
772 |
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
$ |
141 |
|
|
$ |
295 |
|
|
$ |
162 |
|
|
$ |
377 |
|
Exclude:
Lower of cost or market inventory valuation adjustment
(a) |
|
2 |
|
|
— |
|
|
5 |
|
|
— |
|
Adjusted
operating income |
|
$ |
139 |
|
|
$ |
295 |
|
|
$ |
157 |
|
|
$ |
377 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEREFINING SEGMENT OPERATING
HIGHLIGHTS(Millions of Dollars, Except per Barrel
Amounts)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Throughput
volumes (thousand barrels per day): |
|
|
|
|
|
|
|
|
Feedstocks: |
|
|
|
|
|
|
|
|
Heavy
sour crude oil |
|
380 |
|
|
448 |
|
|
404 |
|
|
439 |
|
Medium/light sour crude oil |
|
505 |
|
|
468 |
|
|
519 |
|
|
423 |
|
Sweet
crude oil |
|
1,196 |
|
|
1,177 |
|
|
1,184 |
|
|
1,161 |
|
Residuals |
|
272 |
|
|
269 |
|
|
281 |
|
|
263 |
|
Other
feedstocks |
|
170 |
|
|
131 |
|
|
152 |
|
|
153 |
|
Total
feedstocks |
|
2,523 |
|
|
2,493 |
|
|
2,540 |
|
|
2,439 |
|
Blendstocks and other |
|
304 |
|
|
315 |
|
|
313 |
|
|
320 |
|
Total
throughput volumes |
|
2,827 |
|
|
2,808 |
|
|
2,853 |
|
|
2,759 |
|
|
|
|
|
|
|
|
|
|
Yields
(thousand barrels per day): |
|
|
|
|
|
|
|
|
Gasolines
and blendstocks |
|
1,408 |
|
|
1,368 |
|
|
1,393 |
|
|
1,342 |
|
Distillates |
|
1,071 |
|
|
1,087 |
|
|
1,069 |
|
|
1,057 |
|
Other
products (e) |
|
379 |
|
|
394 |
|
|
425 |
|
|
400 |
|
Total
yields |
|
2,858 |
|
|
2,849 |
|
|
2,887 |
|
|
2,799 |
|
|
|
|
|
|
|
|
|
|
Refining
segment operating statistics: |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
2,297 |
|
|
$ |
3,504 |
|
|
$ |
4,384 |
|
|
$ |
6,526 |
|
Adjusted
operating income (c) |
|
$ |
954 |
|
|
$ |
2,161 |
|
|
$ |
1,649 |
|
|
$ |
3,802 |
|
Throughput volumes (thousand barrels per day) |
|
2,827 |
|
|
2,808 |
|
|
2,853 |
|
|
2,759 |
|
|
|
|
|
|
|
|
|
|
Throughput margin per barrel (f) |
|
$ |
8.93 |
|
|
$ |
13.71 |
|
|
$ |
8.44 |
|
|
$ |
13.07 |
|
Operating
costs per barrel: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
3.51 |
|
|
3.66 |
|
|
3.53 |
|
|
3.80 |
|
Depreciation and amortization expense |
|
1.71 |
|
|
1.59 |
|
|
1.73 |
|
|
1.66 |
|
Total
operating costs per barrel |
|
5.22 |
|
|
5.25 |
|
|
5.26 |
|
|
5.46 |
|
Adjusted
operating income per barrel (g) |
|
$ |
3.71 |
|
|
$ |
8.46 |
|
|
$ |
3.18 |
|
|
$ |
7.61 |
|
|
See Notes to
Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEETHANOL SEGMENT OPERATING
HIGHLIGHTS(Millions of Dollars, Except per Gallon
Amounts)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Ethanol segment
operating statistics (a): |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
167 |
|
|
$ |
220 |
|
|
$ |
287 |
|
|
$ |
365 |
|
Adjusted
operating income (c) |
|
$ |
49 |
|
|
$ |
108 |
|
|
$ |
58 |
|
|
$ |
120 |
|
Production volumes (thousand gallons per day) |
|
3,826 |
|
|
3,793 |
|
|
3,783 |
|
|
3,785 |
|
|
|
|
|
|
|
|
|
|
Gross
margin per gallon of production (f) |
|
$ |
0.48 |
|
|
$ |
0.64 |
|
|
$ |
0.42 |
|
|
$ |
0.53 |
|
Operating
costs per gallon of production: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
0.28 |
|
|
0.31 |
|
|
0.29 |
|
|
0.33 |
|
Depreciation and amortization expense |
|
0.06 |
|
|
0.02 |
|
|
0.05 |
|
|
0.03 |
|
Total
operating costs per gallon of production |
|
0.34 |
|
|
0.33 |
|
|
0.34 |
|
|
0.36 |
|
Adjusted
operating income per gallon of production (g) |
|
$ |
0.14 |
|
|
$ |
0.31 |
|
|
$ |
0.08 |
|
|
$ |
0.17 |
|
|
See Notes to
Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEREFINING SEGMENT OPERATING
HIGHLIGHTS(Millions of Dollars, Except per Barrel
Amounts)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Refining
segment operating statistics by region (d): |
|
|
|
|
|
|
|
|
U.S. Gulf Coast region: |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
1,309 |
|
|
$ |
1,850 |
|
|
$ |
2,547 |
|
|
$ |
3,496 |
|
Adjusted
operating income (c) |
|
$ |
521 |
|
|
$ |
1,086 |
|
|
$ |
958 |
|
|
$ |
1,958 |
|
Throughput volumes (thousand barrels per day) |
|
1,605 |
|
|
1,611 |
|
|
1,649 |
|
|
1,569 |
|
|
|
|
|
|
|
|
|
|
Throughput margin per barrel (f) |
|
$ |
8.97 |
|
|
$ |
12.62 |
|
|
$ |
8.49 |
|
|
$ |
12.31 |
|
Operating
costs per barrel: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
3.58 |
|
|
3.59 |
|
|
3.53 |
|
|
3.71 |
|
Depreciation and amortization expense |
|
1.82 |
|
|
1.62 |
|
|
1.77 |
|
|
1.71 |
|
Total
operating costs per barrel |
|
5.40 |
|
|
5.21 |
|
|
5.30 |
|
|
5.42 |
|
Adjusted
operating income per barrel (g) |
|
$ |
3.57 |
|
|
$ |
7.41 |
|
|
$ |
3.19 |
|
|
$ |
6.89 |
|
|
|
|
|
|
|
|
|
|
U.S. Mid-Continent region: |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
347 |
|
|
$ |
606 |
|
|
$ |
634 |
|
|
$ |
1,143 |
|
Adjusted
operating income (c) |
|
$ |
138 |
|
|
$ |
398 |
|
|
$ |
211 |
|
|
$ |
715 |
|
Throughput volumes (thousand barrels per day) |
|
462 |
|
|
436 |
|
|
458 |
|
|
434 |
|
|
|
|
|
|
|
|
|
|
Throughput margin per barrel (f) |
|
$ |
8.25 |
|
|
$ |
15.27 |
|
|
$ |
7.60 |
|
|
$ |
14.55 |
|
Operating
costs per barrel: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
3.39 |
|
|
3.58 |
|
|
3.41 |
|
|
3.77 |
|
Depreciation and amortization expense |
|
1.58 |
|
|
1.66 |
|
|
1.66 |
|
|
1.68 |
|
Total
operating costs per barrel |
|
4.97 |
|
|
5.24 |
|
|
5.07 |
|
|
5.45 |
|
Adjusted
operating income per barrel (g) |
|
$ |
3.28 |
|
|
$ |
10.03 |
|
|
$ |
2.53 |
|
|
$ |
9.10 |
|
|
See Notes to
Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEREFINING SEGMENT OPERATING
HIGHLIGHTS(Millions of Dollars, Except per Barrel
Amounts)(Unaudited) |
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Refining
segment operating statistics by region (d)
(continued): |
|
|
|
|
|
|
|
|
North Atlantic region: |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
327 |
|
|
$ |
560 |
|
|
$ |
669 |
|
|
$ |
1,115 |
|
Adjusted
operating income (c) |
|
$ |
156 |
|
|
$ |
382 |
|
|
$ |
323 |
|
|
$ |
752 |
|
Throughput volumes (thousand barrels per day) |
|
487 |
|
|
473 |
|
|
480 |
|
|
484 |
|
|
|
|
|
|
|
|
|
|
Throughput margin per barrel (f) |
|
$ |
7.39 |
|
|
$ |
13.02 |
|
|
$ |
7.66 |
|
|
$ |
12.73 |
|
Operating
costs per barrel: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
2.69 |
|
|
2.93 |
|
|
2.79 |
|
|
2.95 |
|
Depreciation and amortization expense |
|
1.17 |
|
|
1.21 |
|
|
1.17 |
|
|
1.19 |
|
Total
operating costs per barrel |
|
3.86 |
|
|
4.14 |
|
|
3.96 |
|
|
4.14 |
|
Adjusted
operating income per barrel (g) |
|
$ |
3.53 |
|
|
$ |
8.88 |
|
|
$ |
3.70 |
|
|
$ |
8.59 |
|
|
|
|
|
|
|
|
|
|
U.S. West Coast region: |
|
|
|
|
|
|
|
|
Gross
margin (c) |
|
$ |
314 |
|
|
$ |
488 |
|
|
$ |
534 |
|
|
$ |
772 |
|
Adjusted
operating income (c) |
|
$ |
139 |
|
|
$ |
295 |
|
|
$ |
157 |
|
|
$ |
377 |
|
Throughput volumes (thousand barrels per day) |
|
273 |
|
|
288 |
|
|
266 |
|
|
272 |
|
|
|
|
|
|
|
|
|
|
Throughput margin per barrel (f) |
|
$ |
12.67 |
|
|
$ |
18.63 |
|
|
$ |
11.05 |
|
|
$ |
15.69 |
|
Operating
costs per barrel: |
|
|
|
|
|
|
|
|
Operating
expenses |
|
4.74 |
|
|
5.35 |
|
|
5.08 |
|
|
5.92 |
|
Depreciation and amortization expense |
|
2.33 |
|
|
2.05 |
|
|
2.73 |
|
|
2.11 |
|
Total
operating costs per barrel |
|
7.07 |
|
|
7.40 |
|
|
7.81 |
|
|
8.03 |
|
Adjusted
operating income per barrel (g) |
|
$ |
5.60 |
|
|
$ |
11.23 |
|
|
$ |
3.24 |
|
|
$ |
7.66 |
|
|
See Notes to Earnings Release. |
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS
RELEASEAVERAGE MARKET REFERENCE PRICES AND
DIFFERENTIALS(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Feedstocks
(dollars per barrel): |
Brent
crude oil |
|
$ |
46.94 |
|
|
$ |
63.50 |
|
|
$ |
41.04 |
|
|
$ |
59.32 |
|
Brent
less West Texas Intermediate (WTI) crude oil |
|
1.47 |
|
|
5.66 |
|
|
1.68 |
|
|
6.12 |
|
Brent
less Alaska North Slope (ANS) crude oil |
|
1.22 |
|
|
0.60 |
|
|
0.96 |
|
|
1.02 |
|
Brent
less Louisiana Light Sweet (LLS) crude oil (h) |
|
(0.39 |
) |
|
0.53 |
|
|
(0.17 |
) |
|
1.44 |
|
Brent
less Mars crude oil (h) |
|
4.92 |
|
|
3.87 |
|
|
5.09 |
|
|
4.94 |
|
Brent
less Maya crude oil |
|
9.21 |
|
|
8.25 |
|
|
9.15 |
|
|
9.63 |
|
LLS crude
oil (h) |
|
47.33 |
|
|
62.97 |
|
|
41.21 |
|
|
57.88 |
|
LLS less
Mars crude oil (h) |
|
5.31 |
|
|
3.34 |
|
|
5.26 |
|
|
3.50 |
|
LLS less
Maya crude oil (h) |
|
9.60 |
|
|
7.72 |
|
|
9.32 |
|
|
8.19 |
|
WTI crude
oil |
|
45.47 |
|
|
57.84 |
|
|
39.36 |
|
|
53.20 |
|
|
|
|
|
|
|
|
|
|
Natural gas
(dollars per million British Thermal Units) |
|
2.08 |
|
|
2.69 |
|
|
2.01 |
|
|
2.73 |
|
|
|
|
|
|
|
|
|
|
Products
(dollars per barrel, unless otherwise noted): |
|
|
|
|
|
|
|
|
U.S. Gulf
Coast: |
|
|
|
|
|
|
|
|
CBOB
gasoline less Brent |
|
11.13 |
|
|
12.76 |
|
|
9.47 |
|
|
10.23 |
|
Ultra-low-sulfur diesel less Brent |
|
9.47 |
|
|
13.41 |
|
|
8.70 |
|
|
14.58 |
|
Propylene
less Brent |
|
(11.79 |
) |
|
(11.10 |
) |
|
(7.09 |
) |
|
1.00 |
|
CBOB
gasoline less LLS (h) |
|
10.74 |
|
|
13.29 |
|
|
9.30 |
|
|
11.67 |
|
Ultra-low-sulfur diesel less LLS (h) |
|
9.08 |
|
|
13.94 |
|
|
8.53 |
|
|
16.02 |
|
Propylene
less LLS (h) |
|
(12.18 |
) |
|
(10.57 |
) |
|
(7.26 |
) |
|
2.44 |
|
U.S.
Mid-Continent: |
|
|
|
|
|
|
|
|
CBOB
gasoline less WTI |
|
13.77 |
|
|
19.87 |
|
|
11.89 |
|
|
17.29 |
|
Ultra-low-sulfur diesel less WTI |
|
11.72 |
|
|
18.18 |
|
|
11.38 |
|
|
20.36 |
|
North
Atlantic: |
|
|
|
|
|
|
|
|
CBOB
gasoline less Brent |
|
14.63 |
|
|
16.13 |
|
|
12.47 |
|
|
12.09 |
|
Ultra-low-sulfur diesel less Brent |
|
11.17 |
|
|
16.17 |
|
|
10.35 |
|
|
19.11 |
|
U.S. West
Coast: |
|
|
|
|
|
|
|
|
CARBOB 87
gasoline less ANS |
|
21.56 |
|
|
30.63 |
|
|
19.45 |
|
|
25.02 |
|
CARB
diesel less ANS |
|
14.71 |
|
|
18.16 |
|
|
12.95 |
|
|
18.66 |
|
CARBOB 87
gasoline less WTI |
|
21.81 |
|
|
35.69 |
|
|
20.17 |
|
|
30.12 |
|
CARB
diesel less WTI |
|
14.96 |
|
|
23.22 |
|
|
13.67 |
|
|
23.76 |
|
New York
Harbor corn crush (dollars per gallon) |
|
0.23 |
|
|
0.33 |
|
|
0.18 |
|
|
0.23 |
|
|
|
See Notes to Earnings Release. |
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIESEARNINGS RELEASEOTHER
FINANCIAL DATA(Millions of
Dollars)(Unaudited) |
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
|
|
|
|
2016 |
|
2015 |
Balance sheet
data: |
|
|
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
$ |
16,180 |
|
|
$ |
14,898 |
|
Cash and temporary cash investments ($67 and $81, respectively,
held by Valero Energy Partners LP) included in current
assets |
|
4,925 |
|
|
4,114 |
|
Inventories included in current assets |
|
|
|
|
|
6,137 |
|
|
5,898 |
|
Current
liabilities |
|
|
|
|
|
8,652 |
|
|
6,994 |
|
Current portion of debt and capital lease obligations included
in current liabilities |
|
864 |
|
|
127 |
|
Debt and capital lease obligations, less current
portion |
|
6,646 |
|
|
7,208 |
|
Total
debt and capital lease obligations |
|
|
|
|
|
7,510 |
|
|
7,335 |
|
Valero
Energy Corporation stockholders’ equity |
|
|
|
|
|
20,576 |
|
|
20,527 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Cash flow
data: |
|
|
|
|
|
|
|
|
Net cash
provided by operating activities |
|
$ |
2,319 |
|
|
$ |
2,329 |
|
|
$ |
2,959 |
|
|
$ |
3,762 |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Valero Energy
Partners LP: |
|
|
|
|
|
|
|
|
Weighted-average limited partner units
outstanding (in millions): |
|
|
|
|
|
|
|
Common
units - public (basic and diluted) |
|
22 |
|
|
17 |
|
|
22 |
|
|
17 |
|
Common
units - Valero (basic and diluted) |
|
16 |
|
|
13 |
|
|
15 |
|
|
13 |
|
Subordinated units - Valero (basic and diluted) |
|
29 |
|
|
29 |
|
|
29 |
|
|
29 |
|
Distributions declared: |
|
|
|
|
|
|
|
Limited
partner units - public |
|
$ |
8 |
|
|
$ |
5 |
|
|
$ |
16 |
|
|
$ |
10 |
|
Limited
partner units - Valero |
|
16 |
|
|
13 |
|
|
31 |
|
|
24 |
|
General
partner units - Valero |
|
5 |
|
|
1 |
|
|
8 |
|
|
2 |
|
Total
distribution declared |
|
$ |
29 |
|
|
$ |
19 |
|
|
$ |
55 |
|
|
$ |
36 |
|
|
See Notes to Earnings Release. |
|
VALERO ENERGY CORPORATION AND
SUBSIDIARIES NOTES TO EARNINGS
RELEASE
(a) In accordance with United States (U.S.)
generally accepted accounting principles (GAAP), we are required to
state our inventories at the lower of cost or market. When the
market price of our inventory falls below cost, we record a lower
of cost or market inventory valuation adjustment to write down the
value to market. In subsequent periods, the value of our inventory
is reassessed and a lower of cost or market inventory valuation
adjustment is recorded to reflect the net change in the inventory
valuation reserve between periods. As of June 30, 2016, the market
price of our inventory was above cost; therefore, we did not record
a lower of cost or market inventory valuation reserve as of June
30, 2016. During the three months ended June 30, 2016, we
recorded a change in our inventory valuation reserve that resulted
in a noncash benefit of $434 million and $20 million
attributable to our refining segment and ethanol segment,
respectively. During the six months ended June 30, 2016, we
recorded a change in our inventory valuation reserve that resulted
in a noncash benefit of $697 million and $50 million
attributable to our refining segment and ethanol segment,
respectively.
(b) In June 2016, the Government of Aruba
(GOA) entered into definitive agreements with an unrelated third
party that provide for such third party to lease the Aruba Refinery
and Aruba Terminal from the GOA, restart and operate the Aruba
Refinery, and operate the Aruba Terminal. Because of this
development, we believe that it is more likely than not that we
will ultimately transfer ownership of the Aruba Refinery and Aruba
Terminal to the GOA and settle our obligations under various
agreements with the GOA. Therefore, we evaluated the Aruba Terminal
for potential impairment as of June 30, 2016 and concluded
that it was impaired. We further determined that the Aruba
Terminal’s carrying value of $56 million was not recoverable
and we wrote off the entire amount, resulting in an asset
impairment loss of $56 million related to our refining segment
in the three and six months ended June 30, 2016. No income tax
benefit was recorded for this asset impairment loss as we do not
expect to realize a tax benefit.
(c) Defined terms are as follows:
- Adjusted net income attributable to Valero Energy
Corporation stockholders is defined as net income
attributable to Valero Energy Corporation stockholders excluding
the lower of cost or market inventory valuation adjustment, its
related income tax effect, and the asset impairment loss.
- Adjusted earnings per common share – assuming
dilution is defined as adjusted net income attributable to
Valero Energy Corporation stockholders divided by the number of
weighted average shares outstanding in the applicable period,
assuming dilution.
- Gross margin is defined as operating income
excluding lower of cost or market inventory valuation adjustment,
operating expenses, depreciation and amortization expense, and
asset impairment loss.
- Adjusted operating income is defined as
operating income excluding lower of cost or market inventory
valuation adjustment and asset impairment loss.
These terms are not defined under U.S. GAAP and are
considered non-GAAP measures. Management has defined these terms
and believes that the presentation of the associated measures are
useful to external users of our financial statements, such as
industry analysts, investors, lenders, and rating agencies, to
assess our ongoing financial performance that, when reconciled to
their most comparable U.S. GAAP measures, provide improved
comparability between periods through the exclusion of certain
items that management believes are not indicative of our core
operating performance and that may obscure underlying business
results and trends.
Adjusted net income attributable to Valero Energy
Corporation stockholders, adjusted earnings per common share –
assuming dilution, gross margin, and adjusted operating income
should not be considered as alternatives to net income attributable
to Valero Energy Corporation stockholders, earnings per common
share – assuming dilution, or operating income presented in
accordance with U.S. GAAP and should not be considered in isolation
or as a substitute for analysis of our results of operations as
reported under U.S. GAAP. Additionally, because adjusted net income
attributable to Valero Energy Corporation stockholders, adjusted
earnings per common share – assuming dilution, gross margin, and
adjusted operating income may be defined differently by other
companies in our industry, our definition of these terms may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility.
(d) The regions reflected herein contain the
following refineries: U.S. Gulf Coast- Corpus
Christi East, Corpus Christi West, Houston, Meraux, Port Arthur,
St. Charles, Texas City, and Three Rivers Refineries; U.S.
Mid-Continent- Ardmore, McKee, and Memphis
Refineries; North Atlantic- Pembroke and Quebec
City Refineries; and U.S. West
Coast- Benicia and Wilmington Refineries.
(e) Primarily includes petrochemicals, gas oils,
No. 6 fuel oil, petroleum coke, sulfur, and asphalt.
(f) Throughput margin per barrel represents gross
margin (as defined in (c) above) for our refining segment or
refining regions divided by the respective throughput volumes.
Gross margin per gallon of production represents gross margin for
our ethanol segment divided by production volumes. Throughput and
production volumes are calculated by multiplying throughput and
production volumes per day (as provided in the accompanying tables)
by the number of days in the applicable period.
(g) Adjusted operating income per barrel represents
adjusted operating income (defined in (c) above) for our refining
segment or refining regions divided by the respective throughput
volumes. Adjusted operating income per gallon of production
represents adjusted operating income (defined in (c) above) for our
ethanol segment divided by production volumes. Throughput and
production volumes are calculated by multiplying throughput and
production volumes per day (as provided in the accompanying tables)
by the number of days in the applicable period.
(h) Average market reference prices for LLS crude
oil, along with price differentials between the price of LLS and
other types of crude oils, and price differentials between Mars
crude oil and other types of crude oils are reflected without
adjusting for the impact of the futures pricing for the
corresponding delivery month. Therefore, the prices reported
reflect the prompt month pricing only, without an adjustment for
futures pricing (known in industry as the Calendar Month Average
(CMA) “roll” adjustment). We previously had provided average market
reference prices that included the CMA “roll” adjustment.
Accordingly, the average market reference price for LLS crude oil
and price differentials for LLS and Mars crude oils for the three
and six month ended June 30, 2015 have been adjusted to conform to
the current presentation.
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